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U.S. Securities and Exchange Commission


Litigation Release No. 23765 / March 3, 2017

Accounting and Auditing Enforcement Release No. 3862 / March 3, 2017

Securities and Exchange Commission v. Desarrolladora Homex S.A.B. de C.V, No. 17-civ-00432-L-WVG (S.D. Cal. filed Mar. 3, 2017)

SEC Charges Mexico-Based Homebuilder In $3.3 Billion Accounting Fraud

The Securities and Exchange Commission today announced that Mexico-based homebuilding company Desarrolladora Homex S.A.B. de C.V. has agreed to settle charges that it reported fake sales of more than 100,000 homes to boost revenues in its financial statements during a three-year period.

The SEC used satellite imagery to help uncover the accounting scheme and illustrate its allegation that Homex had not even broken ground on many of the homes for which it reported revenues.

The SEC alleges that Homex, one of the largest homebuilders in Mexico at the time, inflated the number of homes sold during the three-year period by approximately 317 percent and overstated its revenue by 355 percent (approximately $3.3 billion). The SEC's complaint highlights, for example, that Homex reported revenues from a project site in the Mexican state of Guanajuato where every planned home was purportedly built and sold by December 31, 2011. Satellite images of the project site on March 12, 2012, show it was still largely undeveloped and the vast majority of supposedly sold homes remained unbuilt.

According to the SEC's complaint, Homex filed for the Mexican equivalent of bankruptcy protection in April 2014 and emerged in October 2015 under new equity ownership. The company's then-CEO and then-CFO have been placed on unpaid leave since May 2016. Homex has since undertaken significant remedial efforts and cooperated with the SEC's investigation.

The SEC separately issued a trading suspension in the securities of Homex.

Without admitting or denying the allegations in the SEC's complaint filed in U.S. District Court for the Southern District of California, Homex consented to the entry of a final judgment permanently enjoining the company from violating Section 17(a) of the Securities Act of 1933 and Sections 10(b), 13(a), 13(b)(2)(A), and 13(b)(2)(B) of the Securities Exchange Act of 1934, and Rules 10b-5, 12b-20, 13a-1, and 13a-16 thereunder, and agreed to be prohibited from offering securities in the U.S. markets for at least five years. The settlement is subject to court approval.

The SEC's investigation, which continues, is being conducted by Alfred C. Tierney, Benjamin D. Brutlag, Andrew M. Shirley, Juan M. Migone and Richard Hong. The case is being supervised by J. Lee Buck II. The SEC appreciates the assistance of the Mexican ComisiĆ³n Nacional Bancaria y de Valores.

SEC Complaint



Modified: 03/03/2017